Allapacan Company bought 20% of Amulung Corporation’s ordinary shares on January 1, 2009 for P20,000,000. Carrying amount of Amulung’s net assets at purchase date totaled P60,000,000. Fair value and carrying amounts were the same for all items except for plant and inventory, for which fair values exceed their carrying amounts by P15,000,000 and P5,000,000 respectively. The plant has a 5-year life. All inventory was sold during 2009. Goodwill, if any, has an indefinite life. During 2009, Amulung reported net income of P40,000,000 and paid a P15,000,000 cash dividend. What amount should Allapacan report as investment income for 2009? a. P6,200,000 c. P6,400,000 b. P3,000,000 d. P7,600,000
Allapacan Company bought 20% of Amulung Corporation’s ordinary shares on January 1, 2009 for P20,000,000. Carrying amount of Amulung’s net assets at purchase date totaled P60,000,000. Fair value and carrying amounts were the same for all items except for plant and inventory, for which fair values exceed their carrying amounts by P15,000,000 and P5,000,000 respectively. The plant has a 5-year life. All inventory was sold during 2009. Goodwill, if any, has an indefinite life. During 2009, Amulung reported net income of P40,000,000 and paid a P15,000,000 cash dividend. What amount should Allapacan report as investment income for 2009? a. P6,200,000 c. P6,400,000 b. P3,000,000 d. P7,600,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Allapacan Company bought 20% of Amulung Corporation’s ordinary shares on January 1, 2009 for P20,000,000.
Carrying amount of Amulung’s net assets at purchase date totaled P60,000,000. Fair value and carrying amounts were
the same for all items except for plant and inventory, for which fair values exceed their carrying amounts by
P15,000,000 and P5,000,000 respectively. The plant has a 5-year life. All inventory was sold during 2009. Goodwill , if
any, has an indefinite life. During 2009, Amulung reported net income of P40,000,000 and paid a P15,000,000 cash
dividend. What amount should Allapacan report as investment income for 2009?
a. P6,200,000 c. P6,400,000
b. P3,000,000 d. P7,600,000
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